ORBITECH LTD., MUMBAI V. D.C.I.T. RG.8(2), MUMBAI

ITA 6931/MUM/2012

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 75271 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 2 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-01-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: K
• Next Hearing Date: 20-01-2014
• Assessment Year: 2008-2009
• Appeal Filed On: 16-11-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AJEET KUMAR JAIN
• Assessee Lawyers: K K LALKAKA
• Keywords: Transfer pricing; International transaction

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL K BENCH, MUMBAI . . , . ! , '# ' $ BEFORE SHRI I.P. BANSAL, JM AND SHRI SANJAY ARO RA, AM ./ I.T.A. NO. 6931/MUM/2012 ( % % % % & & & & / ASSESSMENT YEAR: 2008-09 M/S.ORBITECH LTD., TRENT HOUSE, 1 ST FLOOR, PLOT C-60, G-BLOCK, BANDRA KURLA COMPLEX, BANDRA (EAST), MUMBAI 51 % % % % / VS. THE DCIT RANGE 8(2), AAYKAR BHAVAN, MUMBAI. ' '# ./ ( ./ PAN/GIR NO. : AAACC5736G ( ') / APPELLANT ) .. ( *+') / RESPONDENT ) ') , '/ APPELLANT BY SHRI K.K.LALKAKA *+') 7 , ' /RESPONDENT BY S/SHRI MAURYA PRATAP & AJEET KUMAR JAIN % 7 8# / DATE OF HEARING : 20/01/2014 9 & 7 8# / DATE OF PRONOUNCEMENT : 20/01/2014 ': / O R D E R PER I.P.BANSAL,J.M: THIS IS AN APPEAL FILED BY THE ASSESSEE. IT IS DI RECTED AGAINST ORDER TITLED AS APPEAL EFFECT UNDER SECTION144C(5) R.W.S. 92CA(3) OF THE INCOME TAX ACT, 1961 (THE ACT). THE GROUND OF APPEAL READS AS UNDER: ON THE FACTS OF THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE TRANSFER PRICING OFFICER (TPO) ERRED AND DISPUTE RESOLUTION PANEL FU RTHER ERRED IN PARTIALLY CONFIRMING THE ADJUSTMENT TO THE EXTENT OF RS.11,311/- IN RESP ECT OF FIXED DEPOSIT INTEREST WITH ./ I.T.A. NO. 6931/MUM/2012 ( % % % % & & & & / ASSESSMENT YEAR: 2008-09 2 CITIBANK CARRYING INTEREST AT LESS THAN 5.5% WHICH HAS BEEN DETERMINED BY THE TPO AS THE ARMS LENGTH PRICE AND ADDING THE SAME TO T HE TOTAL INCOME. 2. THE ASSESSEE IN THE PRESENT CASE IS CONTESTING T HE TP ADJUSTMENT OF RS.11,311/-. THE INTERNATIONAL TRANSACTION DISPUTE D IS RELATING TO INTEREST RECEIVED BY THE ASSESSEE FROM CITIBANK NA ON BANK T IDE DEPOSIT THE INTEREST RECEIVED BY THE ASSESSEE ON SUCH TYPE OF DEPOSIT WA S RS.54,44,687/- WHICH WAS AT THE AVERAGE RATE OF 4.75%. ACCORDING TO TPO ARM S LENGTH PRICE (ALP) OF SUCH INTEREST WAS INTEREST @5.5%. ACCORDINGLY ALP OF THE INTEREST WAS DETERMINED AT RS.63,04,374/- AND AN ADDITION OF RS.8,59,687/- WAS MADE. THE SAID ADDITION WAS DISPUTED BEFORE DRP. THE DRP VIDE ITS ORDER DATED 30/07/2012 HAS HELD THAT ADDITION IN ITS ENTIRETY WAS NOT MAIN TAINABLE AND ON THE TRANSACTION WHICH CARRY LESS THAN 5.5% INTEREST ARE ONLY TO BE CONSIDERED FOR THE PURPOSE OF ALP. ON THE MAJOR PORTION OF THE AMOUN T ASSESSEE HAS RECEIVED INTEREST @5.5% AND ONLY WITH REGARD TO FOLLOWING T HREE DEPOSITS ASSESSEE HAS RECEIVED INTEREST @ 4%. DATE OF DEPOSIT CUSTOMER NAME DEPOSIT TENOR DEPOSIT AMOUNT (RS) INTEREST RATE 14 TH FEB.2007 ORBITECH LIMITED 47 44,400,000 4% 19 TH FEB. 2007 ORBITECH LIMITED 47 35,600,000 4% 6 TH MARCH 2007 ORBITECH LIMITED 47 600,000 4% FOR THE ABOVE DEPOSITS THE ALP WAS COMPUTED INTERE ST @5.5% AND IN THIS MANNER ADDITION OF RS.11,311/- WAS SUSTAINED. 3. IT IS THE CASE OF THE ASSESSEE THAT THESE DEPOSI TS RELATE TO FEBRUARY AND MARCH, 2007 FOR WHICH THE INTEREST WAS BEING PAID BY CITIBANK NA @ 4% AND SUCH CONTENTION OF THE ASSESSEE IS SUPPORTED BY F OLLOWING CERTIFICATE DATED 11/7/2010 OBTAINED FROM CITY BANK NA. JULY 11, 2012 THE MANAGER, ORBITECH LIMITED, TRENT HOUSE, 1 ST FLOOR, BANDRA KURLA COMPLEX, BANDRA (EAST), MUMBAI. DEAR SIR, SUB: POWER DEPOSITS PLACED BY OUR CLIENT ORBITEC H LIMITED ./ I.T.A. NO. 6931/MUM/2012 ( % % % % & & & & / ASSESSMENT YEAR: 2008-09 3 CITIBANK NA (WE) WISH TO CONFIRM THAT INTEREST RA TE OFFERED TO ORBITECH LIMITED ON THE BELOW POWER DEPOSITS BOOKED DURING FEBRUARY AND MARCH 20 07 IS THE SAME AS GIVEN TO THIRD PARTY CUSTOMERS OF THE BANK FOR SIMILAR POWER DEPO SITS PLACED WITH US DURING THE SAME TIME PERIOD. DETAILS OF DEPOSITS: DATE OF DEPOSIT CUSTOMER NAME DEPOSIT TENOR DEPOSIT AMOUNT (RS) INTEREST RATE 14 TH FEB.2007 ORBITECH LIMITED 47 44,400,000 4% 19 TH FEB. 2007 ORBITECH LIMITED 47 35,600,000 4% 6 TH MARCH 2007 ORBITECH LIMITED 47 600,000 4% SEAL- RISHI MOHINDRU, RELATIONSHIP MANAGER, EMPLOYEE NO.#84891 SD/- YOURS FAITHFULLY, FOR CITIBANK NA COPY OF THE ABOVE LETTER IS FILED AT PAGE -2 OF THE PAPER BOOK. IT WAS SUBMITTED THAT THE AFOREMENTIONED CERTIFICATE WAS ALSO FILE D BEFORE DRP VIDE LETTER DATED 12/7/2012. COPY OF ACKNOWLEDGMENT OF SUBMISSION OF ABOVE LETTER IS ALSO FILED AT PAGE 1 OF THE PAPER BOOK. THUS IT WAS SUBMITTE D THAT EVEN ADDITION OF RS.11,311/- IS NOT SUSTAINABLE. 4. ON THE OTHER HAND, LD. DR RELIED UPON THE ORDER PASSED BY AO. 5. WE HAVE HEARD BOTH THE PARTIES AND THEIR CONTENT IONS HAVE CAREFULLY BEEN CONSIDERED. IN VIEW OF AFOREMENTIONED CERTIFICATE ISSUED BY CITIBANK NA, WHICH WAS ALSO SUBMITTED TO DRP, WE HOLD THAT THE ADDIT ION OF RS.11,311/- IS NOT SUSTAINABLE. ACCORDINGLY, THE SAME IS DELETED AND APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 20/ 01/2014 . ': 7 & #' ; <%= 20/01/2014 7 > SD/- SD/- ( SANJAY ARORA) (I.P.BANSAL) /ACCOUNTANT MEMBER '# /JUDICIAL MEMBER MUMBAI; <% DATED 20/01/2014 ./ I.T.A. NO. 6931/MUM/2012 ( % % % % & & & & / ASSESSMENT YEAR: 2008-09 4 ': ': ': ': 7 77 7 *8?@ *8?@ *8?@ *8?@ A'@&8 A'@&8 A'@&8 A'@&8 / COPY OF THE ORDER FORWARDED TO : 1. ') / THE APPELLANT 2. *+') / THE RESPONDENT. 3. B ( ) / THE CIT(A)- 4. B / CIT 5. @C> *8% , , / DR, ITAT, MUMBAI 6. >D E / GUARD FILE. ':% ':% ':% ':% / BY ORDER, +@8 *8 //TRUE COPY// F FF F / G G G G (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI . % . SR. PS-VM